The Code of Hammurabi is one of the earliest written set of laws known to man.
Hammurabi was the ruler who created the set of codes for his people with the sole purpose of preventing chaos. Today, laws and our system of government exist for the same reason, specifically maintaining stability, protecting property, and preserving the state. Laws are not a question of what is “good” or “bad”, but rather a social contract citizens compose to keep order.
Adversely, the study and adoption of ethics answers the questions of appropriate human conduct, and acts as a compass for citizen’s behaviors and choices. Within this world of law and ethics, exists an economy driven by businesses and organizations. These business can be publicly held …show more content…
entities, large corporations, or small enterprises. The law and ethics society develops greatly affects how businesses operate and it is important to study their creation, existence, and enforcement to properly operate a successful business.
To understand the essentials of law, a business must know the definition. Law is defined as “a rule of civil conduct prescribed by the supreme power in a state, commanding what is right, and prohibiting what is wrong.” In the simplest terms, the function of law is to preserve the stableness of our social, political, and economic system by seeking justice. “ The fair, equitable, and impartial treatment of competing interests with due regard for the common good” is the definition of justice. Law cannot exist without justice, yet justice can exist without law. Due to the definition and purpose of law, many confuse its meaning with morals. An important difference between law and morals is that law administer sanction, while morals are considered a personal standard. Laws are derived from the U.S Constitution, state constitutions, treaties, federal and state statutes, various court decisions, and other various entities. Under the U.S
Constitution, there is an establishment of 3 separate and distinct government powers, each with set limitations. The Constitution gives the executive (administrative) branch, judicial branch, and legislative branch the power to create and develop laws. The administrative branch includes the president and government agencies. Administrative law exists in the form of rules, regulations, and orders to implement the duties of the agencies. Our court system is overseen by the judicial branch, with the Supreme Court as the head of the branch. Judicial law is composed of common law and equity. Common law is a precedent established by the courts for determining later issues brought to court. Equity is a “body of law based upon principles distinct from common law and providing remedies not available at law.” Lastly, the legislative branch is comprised of the two houses of congress, being the senate and house of representatives. Legislative law includes treaties and executive orders given by the president or governor of state. Together, these 3 branches develop substantive laws that list our duties and rights as citizens. They also enhance procedural laws that are the rules for enforcing substantive laws. Accordingly, business associations also have duties and rights within society. However, if they fail to comply with any form of law, that business may face fines and incarceration for any associates involved in a serious crime. This would damage the company finances and overall image of the company.
Therefore, following the state and federal laws allows a business to flourish and maintain a positive image within society.
Consequently, businesses also choose to follow ethical standards so that they could improve the image of their company, thus increasing business with consumers. Ethics are an understood code of conduct within society, while business ethics are an understood set of principles within the business and professional setting. Following laws and a general set of
ethical principles encourages businesses to perform at their highest level of quality. Over time, many ethical theories have been discussed with the intention to create a dependable set of guidelines for people and businesses to make proper ethical judgements. One popular theory used among businesses is Kohlberg’s theory on the development of morality. Kohlberg’s stages of moral development is based on moral growth being apart of the human condition, with the two major variables being age and reasoning. Managers use Kohlberg’s theory to understand how employees, consumers, suppliers, and stakeholders interface with the business at various levels of progression. Managers and business owners are responsible for making sound ethical judgements, however, there is still debate towards the extent of their social responsibility. Many individuals believe the sole responsibility of a company is to maximize profits, while others assert that businesses should make certain societal duties apart of their operations. Arguments against a company’s social responsibility include profitability, unfairness, accountability, and expertise. For those in favor of a company being socially responsible, they consider the social contract companies make with society, less government regulation, and the longrun profits of an ethically responsible business. Although the degree of social responsibility is an area of controversy, many companies still choose to support humanitarian organizations or start an organization of their own to reach out to their community. By studying and following the ethical standards given by society, businesses can avoid disputes brought towards their company and continue efficient operation.
When members of a community and business find themselves with a dispute between each other, they may look to the US court system for civil dispute resolution. In the US, the federal and state government has their own independent court system, each with their own
jurisdiction. Jurisdiction is “the authority of a court to decide a particular kind of case, ” The federal courts include the district court, court of appeals, the supreme court, and special courts.
District courts have general jurisdiction and handle most of the legal cases in the federal system.
The court of appeals hears cases from the district courts and review orders of administrative agencies. The supreme court is the highest court in the nation, with the role of reviewing decisions made by the federal court of appeals and the highest state courts. Special courts have jurisdiction over cases pertaining to federal law, including the U.S Court of Federal Claims, U.S
Tax court, and U.S Bankruptcy court. A typical court system under State governance consists of inferior trial courts,trial courts, appellate courts, and special courts. Minor criminal and civil cases fall under the jurisdiction of inferior trial courts, while trial courts have more of a general jurisdiction over cases. Special courts have particular jurisdiction over a certain area of state law, such as family courts. The state’s court of last resort is appellate courts, also known as the supreme court of state. Appellate courts are responsible for reviewing and making the final decision over lower state courts, unless the U.S supreme court is available to make the final judgement. Judgment for a civil dispute begins with the pleadings, described as a series of formal written statements by each side to a lawsuit, where they explain their side of the story. Following the pleadings is the pretrial procedure “requiring the parties to disclose what evidence is available to prove the disputed facts, designed to encourage settlement of cases or to make the trial more efficient.” The trial Involves a jury, judge, showing of evidence, witnesses, and a verdict. The verdict is the decision reached by the jury based on the facts and evidence provided in the trial. Understanding the process of a trial encourages businesses to be prepared once a dispute case arises against them. With this understanding, a business could hire their lawyers,
gather evidence and witnesses, as well as consider the alternative options of a trial. The prime goal of winning a dispute case would be continuing the operation and success of the company.
A company can gain a vast amount of understanding by studying the U.S Constitution, the major source of our nation’s laws that was created by America’s founding fathers. Under the
U.S Constitution, there is a separation yet direct relationship between federal law and state law, known as federalism. However, the supremacy clause of the U.S Constitution declares that federal law transcends any conflicting state law. The judicial powers of the U.S are not limited to civil dispute resolution, but also use the constitution as a tool to judge and apply laws, while the legislative branch creates laws that follow the constitution. Additionally, enforcing our nation’s laws is the duty of the executive branch of government. Like a 3 legged stool, each branch of government has its purpose in order to balance one another, and limit the power of each branch.
This concept is known as the separation of powers, derived from the U.S constitution. The elements of the Constitution were created for the welfare of citizens and business alike. For this reason, the constitution advocates the power of congress to regulate commerce between foreign countries and the states, with the purpose of boosting the economy and restricting states from harming interstate commerce. The contract clause,first amendment, due process, and equal protection are 4 components of the U.S constitution that limits government to promote the health and success of businesses. Contracts are vital to business operations, therefore states are prohibited from interfering with public and private contracts under Article 1 of the constitution.
The first amendment of the constitution protects the freedom of speech, which encourages businesses to speak out on political issues and market their products. The first amendment also protects business owners from defamation that may harm the reputation of their business. Equal
protection and due process is also emphasized in the fifth and fourteenth amendment. Equal protection requires that comparable companies or people must be treated equally by the government, with no favoritism. Additionally, federal and state governments are prohibited from depriving any person from life, liberty, and property without due process of law, which includes corporations. Corporations and companies are protected by the Constitution, which can be used as a benefiting tool towards their prosperity. Therefore, it is vital for a business to comprehend the elements of the Constitution so they may grow as a company and limit their liability.
Civil liability is voluntarily established through the creation of contracts or involuntarily imposed by law, known as tort law. The purpose of tort law is to compensate those who receive injuries to their persons, property, and economic interests. Torts are committed once a person or business fails to perform their obligation towards another person with legally protected interests, resulting in injury or damages. Damages typically refers to the loss of a business or person’s
capital.
“Injuries may be inflicted intentionally, negligently, or without fault (otherwise known as strict liability)”. When a tort is committed, the harmed party sues to receive compensation for his losses. However, intentional torts are faced with more severe consequences, especially when a business is involved. Therefore, intent to harm a person or company must be proven in court. In order to punish and discourage other entities from performing similar infractions, the court will award punitive damages towards the injured party. Punitive damages are damages awarded beyond what would be normal compensation, accordingly incentivizing businesses. When a tort is committed negligently, the courts must prove that there was a duty of care towards another person, a breach of duty, causation, and actual harm. An unreasonable risk of harm is the essential part of negligence. The courts will use the reasonable person standard to measure the
duty of care an individual has towards another. A reasonable person is determined by the court and is considered someone who is always careful with his actions within a given circumstance, setting the standard of conduct for the case. If the courts decide that a reasonable person …show more content…
had responsibility towards another, and could foresee their actions leading to an unreasonable risk of harm, then an individual would be held negligent for continuing with the action. The individual would have essentially caused the harm, breaching his duty of care towards another, proving liable for damages rendered. Negligence is not a crime, but rather a civil wrong that many businesses face. Businesses must be careful and hold to their ethical system in order to avoid any possible case of negligence that may harm their reputation or finances used to pay damages. A person or company can be held liable for damages even when there is no case of intent or negligence, as long as there is high risk of harm. This kind of liability is known as strict liability, holding those completing the action responsible. Accomplished businesses are aware of their responsibility towards their consumers, adhering to the laws and ethics of our nation. They can further protect themselves by developing a clear understanding of their responsibility between themselves and the consumer.
In order for two parties to maintain a clear understanding of their responsibility towards one another, a contract is formed. Contracts are apart of everyday lives, whether buying products, selling services, merging companies, or even entering into marriage. Over time, contract law has become more formal and detailed, benefiting businesses and people alike.
Contracts are a binding agreement and promise (oral or written) that the courts will enforce, provided the contract is valid. A contract is valid if it meets the 4 requirements listed as mutual assent, consideration, legality of object, and capacity. If a contract does not meet all of the
requirements, it is void without legal effect, no more a contract. A voidable contract, on the other hand, is capable of being made void by one or both of the parties, or carried out. It is a contract that has at least partial legal effect. Unenforceable contracts are “contracts for the breach of which the law does not provide a remedy.” The requirements of a contract begin with mutual assent. Mutual assent is based on the intent and communication to enter into a contract, whether by words or conduct, including an offer and acceptance of the offer. An offer must be definite and certain in order to be accepted. An offer remains open for acceptance for a specified time, or if no time is specified, it remains open for a reasonable duration. Under some circumstances, such as previous formed contracts, silence is perceived as acceptance since the individual failed to reject the contract. Consideration is the intentional exchange rendered for a promise as
“inducement to make the promise enforceable.” Consideration exchanged for the promise may be an act, forbearance to act, or promise to do either. Legal sufficiency and bargained for exchange are the two requirements for consideration. The legal value traded for the promise is legal sufficiency, which may be a legal detriment or legal benefit. Completing an act that one has no obligation to do or abstaining from an act one has a right to do is legal detriment.
Moreover, a legal benefit is “obtaining something to which one had no legal right.” The second requirement of consideration, bargainedfor exchange, is met once both parties to the contract have a meeting of the minds. In other words, both individuals agree upon the exchange. The requirement of capacity refers to the competency one must have to enter a contract. Therefore, society has deemed that minors, incompetent persons, and intoxicated persons have limited or no contractual capacity. A person is viewed as a minor if he has not reached the age of legal majority, which changes in various jurisdictions. If a minor forms a contract with an adult, his
guardian has the option to continue the contract or make the contract voidable. A minor can also ratify a contract once he reaches the age of majority, meaning he can hold the other party accountable for the contract and assume any liability. Contracts are also voidable if made by a person intoxicated or mentally incompetent. Yet if a contract is made by a person under guardianship, the contract is void. The most straightforward, yet often violated, contract requirement is legality of object. “A contract must not be criminal, tortious, or otherwise against public policy” if it is to be enforced. Typically when an individual withdraws from a binding contract, the other individual can sue or recover what he gave in the contract. Yet with an illegal contract, the individuals can not sue or receive what was rendered. However, there are certain situations, such as one party not being equally at fault, which one party may sue another for just compensation when there is a breach of contract. A breach of contract refers to a party’s failure to meet the terms of the contract. A breach is one of the 4 ways a contract is discharged, the other
3 being discharge by performance, agreement of the parties, or by operation of law. When there is a breach of contract, the law provides a remedy to aid the injured party. There are monetary damages or equatable damages an injured party may seek out. The two equatable damages involve specific performance or injunction. Specific performance requires a judge to force the party breaching the contract to complete their “end of the bargain.” An injunction is a court order for a party to cease an action or form of conduct that favors the contractual obligation.
Restitution is also a contractual remedy with the idea of restoring an injured party to his original state. If a company adheres to the requirements of a contract, the company could perform the contract with no breach or remedies to follow. Hence contract law and its development is crucial to the daily operations of a business and its transactions, a prime source of wealth.
In the same way contractual law has developed over time, so has the formation of corporations, which counts for 85% of the gross revenue of businesses. Business associations are an umbrella term used to represent organizations of many different types, such as sole proprietorship, partnerships, and LLC. Sole proprietorships are businesses owned by a single person who assumes all liability and responsibility over the business. In a partnership, multiple people assume liability and responsibility over a company. An LLC is a beneficial mix between a partnership and a corporation, with limited liability that may or may not issue stock to its shareholders. It has many of the benefits a corporation has, yet smaller in size. Compared to these types of business entities, a corporation is considered a legal entity. Under the fifth and fourteenth amendment of the U.S Constitution, a corporation is also considered a person who will not be deprived of “life,liberty, or property without the due process of law.” A corporation, in many cases, is equally protected as a person.
Contrary to a sole proprietorship or partnership, a corporation is a legal entity, meaning it is an entity separate from its shareholders with distinct rights and liabilities. This means that a shareholder has no financial liability for the mistakes of a company. In addition, corporations have free transferability of shares and widespread investors.
With free transferability of shares, the market value can increase and widespread investors means diversity for the company. Investors are able to vote for company decisions, therefore diversity means a mix of knowledge and skillsets that benefit the decision making process. Investors are able to choose a board of directors for the company, benefiting from centralized management. In relation to law, corporations are creatures of state law; if they are under federal jurisdiction, then they are government associations. Whether public government associations or privately held companies, a corporation has perpetual existence, unless otherwise noted in the charter. The
charter is the grant given by legislator that makes a company a corporation with given
privileges.
A company can choose to be a profit organization or a nonprofit organization. A profit organization operates with the intent to gain profit, while a nonprofit organization operates with the intent to donate all profits to charitable purposes. Choosing to be a profit or nonprofit organization is up to the organization and whether they want to be a corporation at all.
Understanding the differences between various business structures helps a company decide the most beneficial structure for their operations. A corporation is best for a company that wants limited liability while being large in size and performance. However, a company can still be successful even if they choose not to be a corporation, as long as it is the structure determined best for their vision.
A company’s vision is the goals and accomplishments it would like to receive in the future. The ruler Hammurabi had the vision for his people to live in peace and conformity, thus the creation of the code. In order for businesses and communities to live in conformity today, society has developed our laws to reflect the behavior we wish to see in professional and personal settings. By examining the essentials of law, ethics,dispute resolution, constitutional law, torts, contracts, and corporations, a business can function successfully and harmoniously with its community, achieving the American dream.